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Stock-Based Compensation
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation
Total stock‑based compensation expense consists of the following:
Three Months Ended
March 31,
20232022
Restricted stock and restricted stock units (“RSUs”) expense
$13,923 $5,365 
Bonus Plan expense (see Note 11)4,546 8,161 
ESPP expense (see Note 13)575 680 
Stock option expense343 756 
DCP elective participant deferrals expense (1) (see Note 12)
97 137 
Total stock-based compensation expense (2)
$19,484 $15,099 
(1)DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan.
(2)As of March 31, 2023 and December 31, 2022, $5,213 and $7,300 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.
Total stock‑based compensation expense is included in the consolidated statements of operations as follows:
Three Months Ended
March 31,
20232022
Cost of subscriptions and licenses$1,034 $385 
Cost of services1,007 383 
Research and development5,286 5,395 
Selling and marketing2,870 1,454 
General and administrative9,287 7,482 
Total stock-based compensation expense$19,484 $15,099 
Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. Specifically for performance‑based RSUs, stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period based on the number of awards expected to vest at each reporting date. The Company accounts for forfeitures of equity awards as those forfeitures occur.
Stock Options
The following is a summary of stock option activity and related information under the Company’s applicable equity incentive plans:
Weighted
WeightedAverage
AverageRemainingAggregate
StockExercise PriceContractualIntrinsic
OptionsPer ShareLife (in years)Value
Outstanding, December 31, 20223,794,515 $5.57 
Exercised(1,002,122)5.46 
Forfeited and expired(7,500)5.60 
Outstanding, March 31, 20232,784,893 $5.62 0.7$104,084 
Exercisable, March 31, 20232,782,393 $5.62 0.7$103,991 
For the three months ended March 31, 2023 and 2022, the Company received cash proceeds of $4,202 and $2,768, respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the three months ended March 31, 2023 and 2022 was $35,076 and $62,025, respectively.
As of March 31, 2023, there was no remaining unrecognized compensation expense related to unvested stock options.
Restricted Stock and RSUs
Under the equity incentive plans, the Company may grant both time‑based and performance‑based shares of restricted Class B Common Stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business profitability and growth targets, which include growth in annualized recurring revenues (“ARR”), as well as actual bookings for perpetual licenses and non‑recurring services, and certain non‑financial performance targets. Performance targets are generally set for performance periods of one to three years.
The following is a summary of unvested restricted stock and RSU activity and related information under the Company’s applicable equity incentive plans:
Time-Performance-
BasedBased
Time-WeightedWeighted
TotalBasedAverageAverage
RestrictedRestrictedPerformance-Grant DateGrant Date
StockStockBasedFair ValueFair Value
and RSUsand RSUsRSUsPer SharePer Share
Unvested, December 31, 20223,068,851 2,706,078 
(3)
362,773 
(4)
$36.67 $38.21 
Granted1,152,992 
(1)
962,574 190,418 
(5)
41.0938.93
Vested(370,127)(212,967)(157,160)39.37 38.20 
Forfeited and canceled(38,959)(30,165)(8,794)27.23 34.36 
Unvested, March 31, 20233,812,757 
(2)
3,425,520 387,237 37.83 38.65 
(1)For the three months ended March 31, 2023, the Company only granted RSUs.
(2)Includes 68,159 RSUs which are expected to be settled in cash.
(3)Includes 199,076 time‑based RSUs granted during the three months ended March 31, 2022 to certain officers and key employees, which cliff vest on January 31, 2025.
(4)Primarily relates to the 2022 annual performance period, except for 185,186 performance‑based RSUs granted during the year ended December 31, 2022 with extraordinary terms, which are described below.
(5)Primarily relates to the 2023 annual performance period, except for 13,367 additional shares earned based on the achievement of 2022 performance goals for performance‑based RSUs granted during the year ended December 31, 2022.
During the year ended December 31, 2022, the Company granted 185,186 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals over a three‑year performance period (the “Performance Period”). For each year of the Performance Period, one‑third of the performance‑based RSUs will be subject to a cliff, whereby no vesting of that portion will occur unless the Company’s applicable margin metrics (which, for 2022, was Adjusted EBITDA margin and for 2023 and 2024, will be Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin, excluding the impact of currency exchange fluctuations) also equals or exceeds the relevant target level for such year. Provided that the applicable margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of growth targets, which include growth in ARR, as well as actual bookings for perpetual licenses and non‑recurring services. Final actual vesting will be determined on January 31, 2025. The 2022 Adjusted EBITDA margin target for the performance‑based RSUs was met.
In 2016, the Company granted RSUs subject to performance‑based vesting as determined by the achievement of certain business growth targets. Certain colleagues elected to defer delivery of such shares upon vesting. During the three months ended March 31, 2023, 7 shares were earned as a result of dividends. During the three months ended March 31, 2022, 10,888 shares were delivered to colleagues and 7 additional shares were earned as a result of dividends. As of March 31, 2023 and December 31, 2022, 9,370 and 9,363 shares, respectively, of these vested and deferred RSUs remained outstanding.
The weighted average grant date fair values of RSUs granted were $40.73 and $39.26, for the three months ended March 31, 2023 and 2022, respectively.
For the three months ended March 31, 2023 and 2022, restricted stock and RSUs were issued net of 78,993 and 38,955 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $3,025 and $1,555, respectively.
As of March 31, 2023, there was $104,808 of unrecognized compensation expense related to unvested time‑based restricted stock and RSUs, which is expected to be recognized over a weighted average period of approximately 2.0 years. As of March 31, 2023, there was $11,651 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 1.3 years.